The $154 Million Question – Pipeline vs. Energy Efficiency and Renewables?

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energy efficiency and renewablesRichard Faesy, of Energy Futures Group, explains why Vermont would benefit more from energy efficiency and renewables than a new natural gas pipeline.

One hundred fifty-four million dollars is a lot of money for Vermonters to spend on Vermont Gas Systems’ Addison County pipeline. That same amount of money could be much better spent weatherizing homes and businesses, installing more efficient heating systems, and installing solar photovoltaic (PV) systems.

The numbers are compelling. Using Vermont Gas’ own projections for Phase 1 of the pipeline, the cost for each new residential customer who switches from oil or propane heating to natural gas heating would be about $11,000 (the cost for each new commercial gas customer would be about $46,000 and the cost for each new industrial gas customer would be about $17 million). Layer on top of that $6,000 for Vermont Gas’ connection fee and a new gas boiler or furnace and the price tag per new residential gas customer jumps to $17,000. In exchange, based on current differences between oil and natural gas prices, those customers would see about a 30 percent reduction in their heating bills. However, the same customers could achieve similar or greater reductions in their heating bills – at lower cost – through a combination of increased insulation, sealed air leaks, more efficient oil or propane heating systems, new cold climate electric heat pumps and/or solar PV.

Moreover, a strategy that focuses on energy efficiency and renewable energy provides considerable flexibility to adapt to future changes in equipment technology, environmental regulations, biofuels (wood pellets today and liquid biofuels in the future) and other unknowns. It would also substantially reduce consumers’ exposure to future fuel price volatility. In contrast, the new gas pipeline locks us into burning a particular fossil fuel for decades into the future.

The proposed new gas pipeline is also a comparative loser from an environmental standpoint. Considering only the emissions from burning fuel in a home or business (i.e. without considering emissions associated with the fracking process), a switch from oil to gas reduces carbon emissions by about 27 percent. A strategy that relies instead on improved efficiency and clean energy technologies (like cold climate heat pumps) will produce greater carbon emission reductions. Even with the current carbon mix on our electric grid, heat pumps alone can produce about a 34 percent reduction in heat-trapping pollution. If the home also gets added insulation and/or air sealing, the carbon emission reductions would be even greater. And if the electricity to power the heat pump is ultimately produced with renewable energy, the emission reductions become greater still.

Vermont Gas is not proposing spending their own corporate funds to build the pipeline. It plans to ask customers to foot the bill through higher rates.

Indeed, this combination of strategies is likely to be what is needed to achieve Vermont’s objective of meeting 90 percent of its energy needs with renewable energy by 2050. It would also support local home performance and renewable energy contractors, boosting our local economy and helping build their businesses to weatherize other Vermont homes and businesses.

But, you might say, that $154 million is not our money to spend. Well, it is not Vermont Gas’ money either. Vermont Gas is not proposing spending their own corporate funds to build the pipeline. It plans to ask customers to foot the bill through higher rates. Is that really appropriate, when efficiency and clean energy technologies can do the trick for less?

Maybe this is the right time to ask ourselves, the legislature and the public service board whether a portion of our fuel bills should support moving away from fossil fuels. Faced with the option of spending $154 million weatherizing our buildings and converting them to heat pumps powered by renewables and sustainably produced biofuels, or building massive new and unnecessary fossil fuel infrastructure, the choice is crystal clear. Let’s spend our scarce dollars on energy efficiency and clean energy technologies instead of more fossil fuels. Rather than locking us in to an expensive and polluting future, we can leapfrog over a pipeline and bring about a cleaner, less risky and lower cost energy future.

Richard Faesy is a principal at Energy Futures Group, a clean energy policy and program consulting firm. He is a resident of Starksboro, Vermont.

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